California Woman Gets 5-Year Prison Term in Phishing Conviction

A woman arrested by federal investigators in a takedown of a phishing scheme has been sentenced to five years in federal prison. The conviction stemmed from Operation Phish Phry, a massive operation that has led to nearly 50 convictions in Los Angeles.

A California woman linked to an international phishing operation was sentenced May 14 to five years in federal prison.

Nichole Michelle Merzi, 26, of Oceanside, was convicted in 2011 after being tied to a gang that sought to defraud banks of more than $1 million. After a six-week trial, she was found guilty of bank and wire fraud conspiracy, aggravated identity theft, computer fraud conspiracy and money laundering conspiracy charges.

According to authorities, Merzi and her then-boyfriend Kenneth Joseph Lucas II were involved in a phishing scheme stretching from the streets of LA all the way to Egypt. Officials nabbed the cyber-gang back in 2009 after a multinational investigation known as Operation Phish Phry, a joint effort by law enforcement officials in the United States and Egypt that led to charges being filed against 100 people.

To date, 47 defendants in the case have been convicted in federal court in Los Angeles. Of the 100 people who were arrested in the original case, 47 were charged in Egypt and 53 were charged in the United States.

This international phishing ring had a significant impact on two banks and caused huge headaches for hundreds, perhaps thousands, of bank customers, then-acting United States attorney George S. Cardona said in a statement when the operation was concluded in 2009.

Organized, international criminal rings can only be confronted by an organized response by law enforcement across international borders, which we have seen in this case.

In 2011, Lucas was sentenced to a total of 13 years after being convicted in two federal cases  one stemming from the phishing scheme and the other involved a marijuana-growing operation. As part of the phishing case, Lucas pleaded guilty to 49 counts of bank and wire fraud, aggravated identity theft, computer fraud and money laundering conspiracy charges.

The cyber-gang used traditional phishing tactics, spamming out emails that appeared to be official correspondence from banks or credit card companies. The emails directed recipients to surf to phishing sites that were used by the gang to harvest information. Once there, the customers would be prompted to enter their account numbers, passwords and other sensitive information, according to the FBI. Using the stolen data, the gang hacked into accounts at two banks and then individuals in Egypt coordinated the transfer of the stolen funds to other accounts.

The U.S. branch of the operation was overseen by Lucas, who directed other conspirators to recruit drops to set up and use bank accounts where stolen funds could be held. A portion of the stolen money was transferred through wire services to the Egyptian co-conspirators.

The harm done by [Merzi]s activities is undisputed, according to the governments sentencing memo. Although BOA [Bank of America] and Wells Fargo reimbursed the individual victims whose accounts were compromised, it is undeniable that the scheme affected a large number of victims, given that the illegal phishing transfers occurred in amounts around $1,000 at a time.
Merzi has been in custody since her conviction in March of 2011.